The Net Asset Value (NAV) of IGF increased by +3.6% in August, outperforming the MSCI World Net Total Return Index by +1.4%. The SEMTRI didn’t extend its streak of outperformance to a third month in a row as the local equity benchmark posted only a small return of +0.3% during the month under review. Top 3 contributors to the performance of IGF were the positions in VanEck S&P Global Mining ETF, iShares Physical Gold ETC, and iShares Core MSCI Emerging Markets IMI ETF. Top 3 detractors were the positions in Xtrackers II Japan Government Bond ETF, Total Energies, and Shell.

Despite further tensions in the Middle East, the price per troy ounce of gold bounced back strongly in August from a bottom of around USD 4,000 in July. Crude oil prices continued their rally from the previous month while equity securities of integrated oil companies did not follow the move in the underlying commodity. Further in energy markets, Brent crack spreads climbed to record levels of USD 73 at the end of August while European natural gas prices reached levels not seen since the beginning of 2023. The situation in energy markets will drive global inflation higher in the coming months once higher prices feed through supply chains. Central banks such as the U.S. Federal Reserve and the ECB could be required to hike interest rates already in September to respond to increasing inflationary pressure. Given these macroeconomic headwinds, the resilience of global equity markets remains impressive. While the global earnings season for the quarter ended 30 June was exceptionally strong in aggregate, growth in earnings was mainly driven by Asian and U.S. hardware firms as well as U.S. cloud computing firms. Other sectors, particularly those catering to the end consumer, showed more pedestrian growth rates while equity valuations stayed elevated. IGF is focusing more on value and commodity-related equity opportunities in this environment. The fund is also holding a sizeable cash reserve that can be deployed during market corrections.

IGF continues to align its portfolio with the portfolio construction framework developed by Gavekal, leading to a more prominent use of exchange-traded funds (ETFs). Due to this alignment, diversification of the portfolio will increase further in the coming months.

As always, we remain available to address any questions you may have.